Pages

Wednesday, August 12, 2009

Expensive textbooks: Part I

This post is the first in a two-post sequence on expensive textbooks. In this post, I offer my explanation for why college textbooks are so expensive. In my next post on the topic, I'll suggest an alternative: "free." Read on, and tune in next time.

Textbooks are a significant hidden expense to obtaining a college degree. No matter how good the textbook is, the price is usually high enough so that few students are grateful that they had to buy the book. That was my experience when I taught intro-mediate microeconomics at Montana State, and I suspect that sentiment is felt by a sizeable fraction of college students.

Moreover, it's not a great introduction to the subject to say, "Hello. I'm thick and shiny. I'm also required. Fork over $150." On account of the steep price tag, textbooks are perceived as an expense, rather than a resource. And, that puts students off.

As someone who loves spreading the good word of economics, my first temptation is to shout, "These textbooks are too expensive. Something must be done." After all, the high cost deters people from listening. On the other hand, shouting first and asking questions later goes against my economist instinct to focus on positive questions (i.e., questions about "what is" rather than "what should be").

So, let's go through this line of reasoning. Why are textbooks so gal-dern expensive?

1. Materials. Of course, there are inputs and those inputs have cost. But, if you paid $150 for a shiny textbook, $20 of that would come from the printing and binding costs. How do I know? Using printing on demand services (which cost more per unit than the standard printing press run), my own textbook has materials cost of around $13. More on this later.

2. Author compensation. The textbook author has to be incentivized to put the work into writing the book; perhaps, developing some graphics, writing exercises, coming up with examples, etc. On the other hand, one great motivator for these activities is to be forced to teach a class. If you're meticulous about your examples and course notes, teaching a course for a couple of years can lead to most of the raw material for a textbook.

Therefore, authors need to be compensated less than one might think to write a textbook. Mostly, you just need to compensate the author to be meticulous enough to catch grammar errors. The fact that he or she is obliged to teach a class anyway means that we could probably get away with paying the author $5 or $10 per textbook sold. Suppose you sell 10,000 copies. That's $50,000 to $100,000, and keep in mind that this is supplemental income.

3. Editorial review and fluff. The first two chunks comprise approximately $25 to $30 of your $150 textbook. So, where does the rest of the expense come from? Textbook companies employ all sorts of specialists: editors, marketing experts, graphic designers, etc.

Moreover, the employees of the textbook publishing companies are not by-and-large subject matter experts. Therefore, they need to solicit expert opinion, and what better way to do this than to send free copies of the book to professors who could teach out of the book? And, that's what textbook companies do. Not only do they send free copies of the book to professors, but they compensate instructors for reading and critiquing segments of the book.

In one year of working as an adjunct professor, I received five to seven of these free textbooks and three to five requests to review parts of textbooks. Sometimes, I would only be asked to review a Table of Contents and Preface. Other times, I would be asked to read up to one chapter of a textbook on the presentation of the material.

How much did it pay? $25 to $300 per review. Now, if you look in the front of your economics textbook, you'll see a list of names. The list of names is usually a couple of pages long. Those are the people who were paid for reviewing a portion of the textbook, and they're the ones who agreed to have their name printed.

That's a lot of expense, and I do wonder if it is duplication of effort. At the same time, how else is the textbook company going to market the book? From their perspective, contacting and paying a set of professors who teach the target class is good advertising. It is targeted marketing that's worth the expense of printing a trial copy of the book and writing a check for $250.

After all, when professors adopt a textbook, they bring a bunch of (un)willing consumers of that book with them. From the perspective of a pseudo-insider, that's the primary reason for why textbooks are so expensive. We might get sparkly textbooks that are easy on the eyes, but is the sheen worth the expense? Maybe it is.